Dividend Discount Model (DDM)

Intermediate level

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Dividends are the cleanest and most straightforward measure of cash flow because these are clearly cash flows that go directly to the investor.

1 DPS0 = Sum of the last year dividends per share of Intuitive Surgical Inc.’s common stock. See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Required Rate of Return (r)

Assumptions

Rate of return on LT Treasury Composite1

RF

Expected rate of return on market portfolio2

E(RM)

Systematic risk of Intuitive Surgical Inc.’s common stock

βISRG

Required rate of return on Intuitive Surgical Inc.’s common stock3

rISRG

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).